Welcome to the Seven-Year Technology Pause

much attendant drama in the way of bankruptcies and accounting scandals. The next seven years, from 2000 to 2007, saw cost-cutting, far more caution on the part of investors, and a slow rebound.

In the shadows, two key trends took shape: first, the use of “Web 2.0” tools like JavaScript and XML to make Web pages far more interesting and interactive, and second, the rise of cloud computing, embodied in Software-as-a-Service companies like Salesforce.com and storage and processing utilities like Amazon Web Services. But these were infrastructure technologies. While they provided the foundation for much future progress, they didn’t fundamentally change the way we use computers.

The next big jolt didn’t come until January 9, 2007, when Steve Jobs unveiled the iPhone. The device wasn’t notable for its technology, per se: camera phones had been around for a long time, as had touchscreens, portable music and video players, and even mobile apps. The genius of the iPhone was in the way it organized all these elements and made them a joy to use. With the addition of the iTunes App Store in 2008, Apple also conjured up a marketplace for third-party software that would create a new profession of mobile developers and make the iPhone ever more useful and powerful.

The hypothesis I’m offering is that the biggest revolutions in information technology are the ones like Mosaic and the iPhone that inspire us to reorganize the way computing fits into our lives, thereby creating lots of room for follow-on innovation. Those are the kinds of breakthroughs that only seem to come along every 15 years or so. The first half of the intervening stasis period seems to be about experimentation and growth; the second half is about retrenchment and mopping up. We experienced the last big shift in 2007, so the question is, what now?

From a business perspective, the post-iPhone period (2007-2014) bears a pretty strong resemblance to the post-Mosaic period (1993-2000). We’ve witnessed strong gains in venture investment, an explosion in the number of tech startups, and a monstrous increase in the population of tech millionaires and billionaires. It looks a lot like a bubble, and it will likely go bust. If investors are rational enough to pull back gradually, we could have a soft landing rather than a crash.

Either way, it’s looking likely that 2015-2022 will be a repeat of 2000-2007, meaning that we’re mainly just riding out the cycle until the next big speciation event. The phyla we’ve got are swimming along fine—people are still buying iPhones at the rate of 160 million per year (though iPad sales are slumping, indicating the tablet market may already be saturated). But an iPhone 5s is still recognizable as an iPhone; we’re wobbling around the mean. I see no signs that any reorganizing innovation will arrive in the near term, and if it did, it would be ahead of schedule.

If I had to guess where the next organizing innovation will happen, around 2022, I’d say artificial intelligence. In a way, both Mosaic and the iPhone were about taking existing collections of digital data (text documents, photos, songs, videos) and making them more accessible, remixable, and useful. A truly smart smartphone would be able to take all that stuff, plus everything it knows about us and our relationships and our surroundings, and act as an omnipresent guide, counselor, watchdog, and concierge. Siri and Cortana could become the grandmothers to a whole new race of virtual assistants, each tailored to its owner, like Samantha in Her.

Let’s just hope they don’t get together and decide it’s time for a mass extinction.

Thanks Dan. That IBM white paper is a real blast from the past. Do you share my sense that we’re now at or near the top of another cycle, and cruising for a bruising?

MITDGreenb

I view things from the framework of that paper. The Financial Markets are in their flat cycle, starting 2001. That goes to about 2018. I like your idea that innovation markets follow a similar pattern, with 2020-2022 the next game-changer. As long as they don’t coincide, we won’t get too bruised IMO.

But what is that game changer? I agree with you that it’s some new way of organizing/disseminating information (driven by a complementary ad model), but I can’t visualize what it is other than something BORG-like.

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